(RealShare Apartments East comes to the Hyatt Regency in Miami, FL, on February 26.)
NEW YORK CITY-The New York City Housing Authority is moving ahead with the plan it first unveiled last fall to issue ground leases to private developers of some three million square feet of luxury apartments in Manhattan housing projects. As previously reported, the agency is deploying the plan to try and recoup some of its rising costs.
The New York Daily News reported on Wednesday that it had obtained documents indicating that NYCHA plans to have 4,330 apartments built in eight developments across several swaths of Manhattan, including the Upper East and West sides, the lower East Side, and Downtown. The project has several enticements for developers: a 99-year-lease on which the lease payments to the authority are frozen for the first 35 years, and a ratio of 80% of the units being “market rate” with only the remaining 20% serving as affordable housing.
A number of questions posed by GlobeSt.com to NYCHA were unanswered at presstime, though the agency did respond with the following statement from its communications office: “This innovative plan to generate hundreds of millions of dollars of value will allow us to re-invest in NYCHA, where we badly need to make up for the devastating decline in Congressional funding. Strategies like this are vital to improving the circumstances of NYCHA’s residents and buildings and ensuring that quality public housing is available to New Yorkers who need it. Since announcing this plan in the fall, we’ve been closely engaged with residents, community leaders and elected officials. We look forward to continuing that outreach.”
NYCHA expects to bring in $31 million to $46 million in annual lease payments, which it will put toward fixing buildings in need of repair, according to the News. The agency has a backlog of 420,000 repair orders and each year it amasses a $60 million budget gap. It has come under fire recently for those shortfalls, which have been reported in conjunction with a consultant’s findings of inefficiency at the agency and calls by local politicians for massive changes.
Politicians are taking issue with this latest plan too. The News reports that City Councilwoman Margaret Chin—whose lower Manhattan district includes two of the targeted developments—called the 20% of units earmarked as subsidized housing “definitely not enough.” The agency’s chairman, John Rhea, allegedly responded to her by saying “with every unit of affordable housing, you’re taking away [money] that could be used by NYCHA.” The plan also seems to fly in the face of Mayor Michael Bloomberg’s plan to build and preserve 165,000 units of affordable housing by the time he leaves office this fall.
Critics also question whether NYCHA needs the money. It’s been widely reported that the agency recently has suffered gross mismanagement and in fact is sitting on unused funds. Earlier reports in the News blast the Housing Authority both for spending $10 million on a consultants study and on shelling out $26 million to hire two different consultants who peformed largely duplicate work.
This ground-lease program is a first for NYCHA; it has not previously leased land for market-rate housing. It was unclear how the idea came about or why it was being deployed at this time. The plan could still be subject to change: the agency said in its initial announcement that it would discuss all plans with residents, politicians and other interested parties before making any moves. Watch for updates with additional information as it becomes available.